Dangote Cement sues Nigerian govt over cement waiver



July 3rd, 2012 / By Tunde Opeseitan, Snr Reporter for Daily Independent


Dangote Cement Limited on Tuesday  sued  Nigerian Government before a Lagos Federal High Court over a cement waiver granted to one of his major competitor in the cement manufacturing industry, Ibeto Cement Company.

Dangote Cement Limited, is seeking the revocation of the purported waiver to Ibeto and also an order compelling Ibeto and its subsidiaries to pay to the Federal Government some unpaid import duties estimated at billions of naira.

When the case came up on Tuesday, trial Judge, Justice Binta Murtala-Nyako ruled that she would conduct a simultaneous hearing on Dangote’s originating motion and the defendants’ preliminary objection with a view to saving time.

The judge maintained her position to take all pending applications at once despite argument to the contrary by the two lead defence lawyers, Onyechi Ikpeazu (SAN) and Fabian Ajogwu (SAN).

Dangote had, in the suit with reference number FHC/L/CS/447/12, named Ibeto  and its subsidiaries – IBG Investment Limited, Derima Ventures Ltd;  Federal Republic of Nigeria, Attorney General of the Federation, Federal Ministry of Finanace, Federal Ministry of Trade and Investment, Board of Customs and Excise, Federal Inland Revenue Service (FIRS) and Nigerian Ports Authority (NPA) as co-defendants.

Ikpeazu for Ibeto and its subsidiaries and Ajogwu for the government agencies had argued that since their objection challenged the court’s jurisdiction, the preliminary objection ought to be determined first and separately.

It is Dangote Cement’s claim that Ibeto, acting in concert with its subsidiaries, IBG and Derima Ventures allegedly suppressed facts and acted fraudulently in obtaining a consent judgment against the Fed Govt in consolidated suits marked FHC/Abj/CS/400/2006 and FHC/Abj/CS/496/2010.

In the consent judgment, the court ordered the government to pay Ibeto about N7.8billion for the unjustified closure of his plant between 2005 and 2007 and set aside a 2010 presidential directive raising import duties and abolishing the import waiver granted Ibeto between 2007 to 2017.

By the judgment, Ibeto was to continue paying 5 per cent import duty till 2017.

Dangote further accused Ibeto and other defendants in the suit of colluding with each other to confer an advantage on Ibeto and its subsidiaries, by allegedly being allowed to import bulk cement with only 5 per cent import tax, excluding Value Added Tax (VAT) as against a Presidential directive of July 8,2010 directing all cement importers to pay 20 per cent import duty and 5 per cent VAT.

The plaintiff, which claimed to be the largest investor in cement manufacturing in the country, argued that the non-implementation of the Presidential directive of 2010 and other earlier directives regulating the tax on imported cement, has denied the Federal Government, FIRS and related agencies of their deserved incomes from such importation.

It noted for instance, that Ibeto, through its subsidiaries, allegedly denied the government of revenue estimated at about N880 million in 2008, N2 billion in 2009, N4.2 billion in 2010 and N8.9 billion in 2011.

Dangote, in its originating summons, set seven questions for the court’s determination and urged the court to among others, declare that the President lacked the powers to waive or alter the provisions of the VAT Act without the National Assembly. It also prayed the court to declare that the 2010 Presidential directive constituted a cancellation of the waiver or tax relief granted Ibeto in 2007.

The plaintiff urged the court to order the Federal Government to recover all duties and taxes owed by Ibeto and its subsidiaries, by virtue of the 2010 directive, an order setting aside the consent judgment and an order directing Ibeto, IBG and Deriva to refund the N7.8 billion paid to it by the government by virtue of the judgment .

It further prayed for an order of perpetual injunction restraining the three companies from further importing cement into the country except as newly approved by the appropriate authorities under the current fiscal tax policy stipulations currently in force.

The Federal Government, in its counter affidavit urged the court to dismiss the suit. It said Dangote’s claims in the suit were “anti-competition and designed to control the entire cement industry and leave Nigerians at the mercy of the plaintiff’s (Dangote’s) price whims and caprices.”

It denied Dangote’s allegation that the consent judgment was obtained fraudulently. It denied that Ibeto suppressed any fact and misled the court into granting the consent judgment.

Besides, government also queried Dangote’s locus standi in instituting the suit.

It argued that since Dangote was not a party in the consolidated suits in which the consent judgment was given, and since it was not directly affected by the judgment, it lacked the right to challenge the judgment.

The government also contended that since Dangote lacked the statutory powers to recover unpaid tax on behalf of the government, it cannot institute cases with the aim of recovering government’s purported unpaid tax.

Also in their joint counter affidavit, Ibeto,IBG and Derima denied all allegations by Dangote. They denied any allegation of fraud and misrepresentation. They claimed to have legitimately consent judgment and the presidential waiver, allowing them to import bulk cement by paying 5 per cent import duty between 2007 and 2017.

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